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Justice Department Urges Starr to Probe Conservative Critics

By Roberto Suro and Susan Schmidt
The Washington Post

The Justice Department Thursday urged Independent Counsel Kenneth W. Starr to investigate allegations that David Hale, a key witness in the Whitewater investigation, was paid off by wealthy conservative activist Richard Mellon Scaife, but alerted Starr that he might face a conflict of interest because of his own possible links to Scaife.

The Justice Department's action requires Starr to determine whether he faces a conflict or even the appearance of one in investigating the charges regarding Hale because of Scaife's potential involvement, and thus for the first time obliges the independent counsel to address in a formal manner longstanding concerns raised by Clinton supporters that he is tainted by partisan associations.

In a letter to Starr, Deputy Attorney General Eric H. Holder Jr. said that if Starr believes he has a conflict over the matter he could refer the allegations back to the Justice Department, which then would conduct an investigation.

Hale provided testimony that helped bring convictions against President Clinton's Whitewater business partners in Starr's most successful prosecution thus far, and under a cooperation agreement with the independent counsel, he has alleged that Clinton was directly involved in a fraudulent loan scheme when he was governor of Arkansas.

In response to media reports, the U.S. attorney's office in Fort Smith, Ark., and the FBI last month began investigating allegations that Hale had received money from individuals associated with Scaife, a Pittsburgh millionaire, who has openly financed efforts to turn up scandalous information regarding the president, first lady Hillary Rodham Clinton and their close friends.

Scaife was the major financial backer for a new school of public policy at Pepperdine University that Starr announced last year he was resigning to head. Starr reversed his decision four days later after a public furor.

After more than a week of deliberating over how to handle the matter, the Justice Department informed Starr Thursday that federal prosecutors in Arkansas had conducted a preliminary inquiry into information suggesting that Hale "may have received cash and other gratuities from individuals seeking to discredit the president during a period when Hale was actively cooperating with your investigation."

Holder said in his letter that the Justice Department had confirmed "that the information warranted further investigation" and that Starr had jurisdiction over the allegations which, if proven, could amount to witness-tampering and other serious crimes.

The money allegedly originated with Scaife, a virulent critic of Clinton who bankrolled several anti-Clinton investigative projects and gave more than $1 million through his foundations to the American Spectator, a magazine that first published a number of allegations against Clinton including those that led to the Paula Jones lawsuit.

Parker Dozhier, a longtime friend of Hale's, had said in recent media interviews that he received money from the American Spectator to help with its Whitewater coverage and in turn gave cash to Hale while he was cooperating with Starr's Whitewater investigation. Dozhier's former girlfriend, Caryn Mann, has said that Hale gave Dozhier detailed reports about the progress of Starr's inquiry.

A spokesperson for Starr's office said the letter had just been received and there would be no immediate comment on it.

Scaife financed an investigation into whether deputy White House counsel Vincent Foster's death in 1993 was the result of foul play, and has been highly critical of Starr's office for an investigation that concluded Foster died by suicide. Starr has privately told associates that he believes Scaife and others on the far right are irresponsible, sources said.

Meanwhile, Linda R. Tripp, key witness in another part of Starr's investigation, said in a brief statement Thursday that she has dismissed one of her lawyers, James Moody.

"Any information provided by Mr. Moody to the media since Feb. 4, 1998, was not authorized and is wholly disavowed," said the statement.

Moody has served as Tripp's spokesman since it became public that she had taped conversations with former White House intern Monica Lewinsky in which Lewinsky allegedly said she had a sexual relationship with Clinton and had been asked to cover it up.

An associate of Tripp's said she believes Moody has had contacts with reporters against her wishes.